"Australian funds flying into foreign airports"

Wednesday, March 2, 2005

Funds flying into foreign airports
By Blair Speedy
The Australian


THE Australian Infrastructure Fund and the Utilities Trust of Australia have
paid $250 million for a half stake in an international airport fund with
holdings in Athens, Dusseldorf, Hamburg and Sydney airports.

The funds, both managed by Hastings Fund Management, have joined with
Canadian and German institutions to establish a vehicle to invest in
international airports. 

The investment marks a renewed interest in aviation assets as passenger
numbers continue to climb, following Macquarie Airports' $282 million
purchase of an 11.3 per cent stake in Copenhagen airport last month. 

German investment fund Hochtief AirPort would sell a third of its existing
European airport holdings and 49 per cent of its stake in Sydney airport
into the new vehicle, to be known as Hochtief Airport Capital (HAC). 

AIF had paid $200 million for 40 per cent of the new fund, while UTA had
paid $50 million for 10 per cent. Canadian pension fund Caisse de Depot et
Placement du Quebec took 40 per cent and German bank KfW Bankengruppe bought
the remaining 10 per cent. 

AIF chief operating officer Mitchell King said a debt facility from parent
company Westpac would provide interim funding for the purchase until it
could be repaid by the proceeds of a $225 million renounceable rights issue
later this month. 

The investment would increase AIF's airport exposure from 81.5 per cent to
an effective 87 per cent of its asset base, and introduce foreign assets to
the portfolio for the first time. 

AIF already had stakes in nine Australian airports, including Melbourne,
Perth, Darwin, Alice Springs, Coolangatta and Townsville. 

HAC would have a 5.1 per cent stake in Sydney, 13.3 per cent in Athens, 10
per cent in Dusseldorf and 13.1 per cent in Hamburg. 

Mr King said the investment was the logical next step in AIF's
transformation into a purely transport-oriented infrastructure fund. 

The newly acquired airports were not only well-established with strong
growth prospects, they also had conservative capital structures that could
be refinanced over time in order to free up funds for shareholders, such as
AIF, he added. 

HAC would be administered by Hochtief AirPort, which had no equity stake in
the new vehicle but would act as a general partner, seeking to identify new
acquisitions. Any new investments would be split one-third HAC and
two-thirds Hochtief. 

The partners would focus on airports in OECD countries with more than 5
million passengers a year, but Mr King said AIF remained interested in other
regions, including airport privatisations in India. 

AIF securities closed 3c higher yesterday at $2.72.


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